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Market Commentary 08/07/16

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EUR/USD – New Lower Low And New Higher High After NFP

A few hours ago the NFP news came out and the effect it has had on EUR/USD is quite strange.

If you remember I said in my last post how the drop which was taking place yesterday may create a supply zone we can use to get a potential short trade placed. You can see in the image how the supply did actually form and caused the price to drop earlier today, it was possible to make a few pips off a short trade here but you would have had to have been quick because once the NFP was released the price suddenly dropped before snapping back and moving higher.

I think the run up which caused a new higher high is form was actually a stop run although it would have been difficult to catch this one as the buy stops were spread out over a relatively large range.

We can see the buy stops were found around the 1.1100 level, if you go onto Oanda you’ll see once the high was broken the buy stops disappear.

The release of the NFP also caused the market to break the important low marked in my previous posts. What we need to look out for now is a break of the new low made by the NFP. It could be that this low was made by the banks placing buy trades into the market, if this is the case we will not see the price fall a large distance below the low as it would jeopardize the trades placed by banks.

If the market does break the low it’s likely the price will continue declining past the low made when Britain decided to leave the EU and we’ll see a resumption of the downtrend.

USD/JPY – NFP Causes Stop Run

In addition to causing a stop run on EUR/USD the NFP also caused a stop to occur on USD/JPY.

Initially when the NFP was released the price shot upwards and almost hit the supply zone that formed yesterday. From here the market proceeded to fall and break the swing low where a collection of sell stops had been building up over the previous few hours.

On the open orders graph you can see how the sell stops had built up around the 100.00 level and the 100.10 level.

Now we need to wait to see which way the market breaks, it could be that the stop run occurred because the banks wanted to take profits off short trade they already have placed, this is the most likely scenario although there exists a small possibility the stop run took place because the banks want a reversal to occur but again I think this is unlikely.

AUD/USD – New Highs After NFP Release

AUD/USD has advanced higher past the swing highs that were made when the market began retracing. It’s now likely for the price to continue rising past the high made before Britain announced it’s exit from the EU.

The important low which I said should be broken didn’t end up being broken, instead we saw the market start moving higher.

This move higher created a demand zone which the market revisited twice, the first was a few hours before the NFP came out and the second was when the NFP was released. The release caused the price to drop into the demand zone before moving higher, now the price has climbed up past the previous highs it’s likely we’ll see more up-movement going into next week.

Finding Supply & Demand Zones That Work!

How Old Supply And Demand Zones Do Not Cause The Market To Reverse And The Reason Why ﻿Traders ﻿Mistakenly ﻿Believe They Do

Why The Time It Takes For The Market To Return To A Supply Or Demand Zone Will Determine Weather The Zone Has A High Chance Of Causing A Reversal To Take Place

The Differences Between Zones Created By Bank Traders Taking Profits And Zones Created by The Bank Traders Placing Trades